|Module Title||COMMERCIAL LAW 2|
|Co-ordinator||Mr Andrew Campbell|
|Other staff||Mr Andrew Campbell, Mr John Linarelli|
|Pre-Requisite||LA10110 or LA30110 or LA15710 and LA15830 or LA35830|
|Course delivery||Seminar||4 Hours Four one hour seminars during the semester|
|Lecture||20 Hours Two one hour lectures per week|
|Assessment||Exam||2 Hours Open Book Examination||100%|
|Resit assessment||By Examination|
|Professional Exemptions||Not Required for Professional Purposes|
Commercial law forms much of the background against which society functions. It is essential to the operation of the business world. However the legal aspects of transactions are not always at the forefront of the minds of those entering into them or carrying them through. Legal rules may not be considered until one side finds that something has gone wrong and a legal remedy is required. The student is faced with the challenge of a subject which has to deal with the tensions created by the need for a legal environment providing clear and certain rules and the requirement of sufficient flexibility to reach a satisfactory result where the transaction was entered upon without thought for the legal rules. Commercial Law should facilitate trade and not place undue technical difficulties in its path. The study of Commercial Law will provide students with an insight into a vital area of modern legal study.
The Second Commercial Law Module deals with three important means of facilitating commercial transactions: Agency, Secured Credit and Commercial Payments.
Credit and security law regulates credit relationships between persons. Credit is a vital part of any functioning market-oriented economy. A basic understanding of the law governing credit is essential for anyone interested in understanding how the commercial world operates. A very common behaviour of firms is that they undertake debt to finance a variety of activities, from day-to-day business operations to funding expansion and product development. Studying credit and security law is thus an integral part of understanding firms, and commerce generally. The emphasis of the module will be on commercial credit - credit between creditors and companies - and on secured credit. A principal distinction in credit and security law is between unsecured and secured credit. With secured credit, the creditor (typically a bank or finance house) takes a right in some asset of the debtor. For example, a firm may take a loan to finance the purchase of equipment, and the creditor may take a security interest in that equipment - a property right - to 'secure' the loan. With unsecured credit, creditors do not take security. A common form of unsecured credit is credit card finance.
Commercial life could not be carried on without the legal concept of agency. An agent is someone who has the legal power to affect the legal rights and liabilities of another, the principal. The agent can bind the principal to a contract as if the principal had made it himself. Something of the importance of this can be grasped when it is considered that every contract made to purchase goods in Leo's or Safeway will be made by an agent on behalf of those supermarkets (i.e. the shop assistant at the till). Considering the more commercial sphere, it should be remembered that every contract made by a company must be made through an agent. A company is a legal person but, not being a real person, it can only act through agents.
Negotiable instruments also impinge on daily life as well as the commercial world. Cheques are one form of negotiable instrument. However, the law relating to negotiable instruments developed from the practices of merchants who wished to avoid the hazards and difficulties of transporting money from place to place. The common law then adopted what had become part of the lex Mercatoria. The Bill of Exchange is still an important means of paying the contract price and may even provide a means of securing credit and financing the transaction. However, electronic payment methods have become increasingly popular and these are studied in detail.
Aims of the module
This module aims to introduce students to fundamental aspects of commercial law (other than those considered in LA 31710 - Commercial Law 1), and to the commercial environment within which commercial law develops.
Module objectives / Learning outcomes
At the conclusion of the module students will have acquired a working knowledge of those particular aspects of commercial law selected for detailed study in the semester. Students will accordingly be able to solve and advise upon more straightforward problems within those areas of law studied and will have acquired some appreciation of the interaction between commercial practice and commercial law.
1. Credit and Security
(a) Introduction - (I) what is `credit? and 'security' - (ii) real versus personal security (b) Classification of security interests - (I) possessory versus nonpossessory security - (ii) security in loans, sales and finance leases - (iii) differences between charges and chattel mortgages and reservation of title and Romalpa clauses (iv) loan covenants (c) Creation of security interests - (I) grant of security - (ii) attachment - (iii) perfection - registration (d) The floating charge (e) Priorities - (I) priority contests - (ii) the relationship between registration and priority - (iii) advances - (iv) after acquired property clauses (f) Enforcement and remedies (g) Transfer of security interests (h) transaction types and transaction structuring.
(a) Introduction - Uses - Basic concepts (b) Types of agency - actual authority - apparent authority - ratification - agency of necessity (c) Relationship of principal and agent - duties of agent - remuneration and indemnity (d) The third party - disclosed principal - undisclosed principal
3. Commercial Payments
(a) Introduction - history - definitions (b) The concept of negotiability (c) Bills of Exchange - definition - negotiation - parties (i) holder for value (ii) holder in due course - liability of parties - payment /endorsement of bills (d) Cheques - definition - Banker / Customer Relationship - Legal Regulation (e) Plastic Cards (f) Internet Payments (g) Recovery of Money Paid by Mistake.
The course is taught by lectures and seminar. It is intended that the lectures will introduce the student to the essential elements of the subject and encourage the further development of the student's understanding of the functioning of the common law. Seminars should then build upon the lectures and the student's own reading. Seminars are intended to further develop the student's ability to analyse problems and present a reasoned argument.
** Recommended Text
Bradgate & Savage. Commercial Law. 2.
Blackstone. Blackstone's Commercial and Consumer Law Statutes.
Goode. Commercial Law. 2nd.